Gulf Brokers: markets to be less predictable if Biden wins
Financial markets are buoyant ahead of the most important political event of the year, the US presidential vote on November 3, which are taken every four years and constantly on the first Tuesday in November.
The stock markets usually generally shift as soon as the election results are published. The main question here in case Democrat leader Joe Biden elected is how the financial markets will respond.
The market shareholders think that it will be negative for the stock market mainly because Biden has said he will roll back Trumps corporate tax cuts, which would hit corporate profit margins.
The Dow Jones Industrial Average has generated 83% average return during Democratic administrations compared with 45% for the Republicans. The S&P500 index increased from 2020 March low, climbed more than 40% after the Federal Reserve elevated liquidity into the market. According to a 2019-Dimensional Funds report, the business has been accurate in 19 of the last 23 election years spanning 1928-2016.
The S&P has bought positive in every six months before a presidential election except 2008. Since 1929, the total return of the S&P500 has averaged 57.4% under Democratic presidential administrations, versus just 16.6% under Republicans.
Will gold remain to rise? On the outset of this month, the gold price hit an all-time high of $2075. The safe-haven metal rose more than 35% this year. The Investors have been buying up gold this whole year as first rising coronavirus cases, increasing tensions between the US and China and then lower interest rates, and now the US election has intensified question among investors.
If you look at the technical chart, the last election time shows that the trends of gold rates soaring in the months of July to October before the vote and then they observed important dash after the event. On average, gold prices remain to decrease until January of the following year.
As the 2020 election gets close, GulfBrokers anticipates the coming weeks in the US presidential election will be volatile for the financial markets due to high levels of uncertainty. The single best way of shielding investors from the downside that an election offers is to secure they have a definitely diversified portfolio.
